Consumer Power Report #253

Published December 28, 2010

Over the past year, it’s been my pleasure to write and produce the Consumer Power Report on occasion in Greg Scandlen’s stead. The work Greg has done in furthering the cause of a pro-consumer approach to health care policy is unequaled, and I’m honored to have the opportunity to speak to you all on a platform he built. As he steps back from this newsletter – though not from the fight for Real Health Reform – I will take it up, writing to you regularly on the same critical topics.

The territory has changed somewhat since the newsletter began – thanks in part to the ill-thought one-size-fits-all approaches from Washington – but the mission has not. I will endeavor to match Greg’s standard of high-quality, informative writing on the health policy issues that affect the lives of all Americans.

It’s an honor to speak to you all, and I hope you will not hesitate to reach out with suggestions and thoughts. See you in 2011!

— Ben Domenech

This will be my last newsletter in this format. I have decided to start an independent blog instead. Go to Real Health Reform to see it.

The advantage of a blog format is that you get to participate in the discussion. Every issue of the newsletter generates a number of e-mails to me; some include insightful additions to what I wrote and others are simply “Attaboy” or “Fahgeddaboutit.” In either case, I’m the only one who gets to see them. That deprives other readers of the benefit of the reactions.

So, the blog will encourage readers to react, and then other readers to react to the reactions. I will insist that the comments be respectful and avoid name-calling, but other than that I’m really looking forward to the discussion.

I will also be inviting a few people to post original writings to the blog. These will be folks who are very knowledgeable and able to write clearly and succinctly.

The coming year is going to be the most consequential one ever in health care. Criticizing Obamacare is not enough, we also need to help policy makers formulate better solutions. Right now, I don’t think most of the Republicans in Congress understand health care well enough to come up with better ideas or to defend the ideas that other people come up with. We need to go back to first principles before we can move ahead with real solutions. I hope that Real Health Reform will help with that process.

And I hope you and your family enjoy God’s blessings for the entire year to come.

— Greg Scandlen



There has been plenty written about the Virginia decision and oodles of television commentary, but most of the commentary has been by people who are politically oriented, so they look at it in terms of political impact and not the legal merits.

For instance, almost all of the comments I’ve seen make the point that the two decisions in favor of the government were made by Clinton appointees, while the one against the government was made by a Bush appointee. This is an insult to the judges involved.

The whole world does not look at things through a partisan lens. I have read the two Virginia rulings, the first by Judge Norman Moon in the Western District of Virginia, and the other by Judge Henry Hudson in the Eastern District of Virginia, and both seem to be well-reasoned, though in disagreement on some points.

While I haven’t read the briefs submitted in either case, it looks to me like the plaintiffs in the Moon decision (Liberty University, et. al.) simply failed to make their case. They provided a hurry-up filing that included every argument they could think of except the kitchen sink. Some of these arguments had no merit whatsoever. For instance, they argue that the employer mandate violates the Commerce Clause, but as Judge Moon points out, “it is well-established in Supreme Court precedent that Congress has the power to regulate the terms and conditions of employment.” Consider the federal minimum wage standard, for one. They also argued that the mandatory coverage would help fund abortions. Bloomberg quotes Judge Moon as saying in his decision, “Plaintiffs fail to allege how any payments required under the act, whether fines, fees, taxes, or the cost of the policy, would be used to fund abortion.” Given the breadth of the arguments and the speed of the filing, I expect they were not as thorough as they needed to be.

The Hudson case was a whole ‘nother matter. Here the plaintiff, the Commonwealth of Virginia, chose its arguments carefully and fully supported them, as you might expect coming from the attorney general’s office. Judge Hudson’s decision thoroughly weighs the issues and the arguments on both sides of the case and comes down decisively on the side of the plaintiffs on the two most important issues. He agrees with the defendants on two other issues – severability and injunctive relief.

His decision is also extremely well-reasoned and supported by precedent. As an example, he writes on page 21:

Despite the laudable intentions of Congress in enacting a comprehensive and transformative health care regime, the legislative process must still operate within constitutional bounds. Salutatory goals and creative drafting have never been sufficient to offset an absence of enumerated powers. As the Supreme Court noted in Morrison, “(e)ven (our) modern era of precedents which have expanded congressional power under the Commerce Clause confirm that this power is subject to outer limits.” Congressional findings, no matter how extensive, are insufficient to enlarge the Commerce Clause powers of Congress. (citations omitted)

In Wickard and Gonzales, the Supreme Court staked out the outer boundaries of Commerce Clause power. In both cases, the activity under review was the product of a self-directed affirmative move to cultivate and consume wheat or marijuana. This self-initialed change of position voluntarily placed the subject within the stream of commerce. Absent that step, governmental regulation could have been avoided.

He later adds on page 24,

Neither the Supreme Court nor the federal circuit court of appeals has extended Commerce Clause powers to compel and individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.

In other words, yes, Congress has the power to regulate commerce, but no, it does not have the power to compel people to unwillingly participate in commerce.

Judge Hudson’s decision is likely to have substantial influence on other cases now in the courts. Indeed, in several points in the decision, Hudson quotes Judge Vinson’s decision to deny summary dismissal of the 20-state suit in Florida. Clearly these judges pay attention to what each other are doing – not because it is some partisan cabal of jurists, but because they actually take the time to think through the issues before them.

SOURCE: Bloomberg; For the Hudson decision in searchable format; For a PDF of the Moon ruling

As an example of the thinking of the plaintiffs in the Virginia and Florida cases, you might want to look at op-eds by Ken Cuccinelli and Bill McCollum published in the Washington Post last week. The Cuccinelli article is especially good.

He is devoted to the rule of law and the Constitution and writes, “The Supreme Court explained in June in its ruling in Free Enterprise Fund v. Public Company Accounting Oversight Board that, while every generation perceives that it faces urgent problems, permitting policy desires to trump the Constitution would usher in far greater evils than those the government is seeking to cure.”

While health care reform may be a good thing, it is more important to preserve liberty. He writes, “The fact that the mandate and penalty were declared unconstitutional should surprise no one. Any other result would mean that the federal government had ceased being a government of limited, enumerated powers, and it could exercise control over any aspect of American life – what lawyers refer to as the ‘police power.’ The Supreme Court has never endorsed such an outcome and made clear in its Morrison decision in 2000 that it has always ‘rejected readings of the Commerce Clause and the scope of federal power that would permit Congress to exercise a police power.’ That is exactly what Congress attempted to do here and why it failed.”

He goes on to urge the Justice Department to help secure an expedited review by the Supreme Court to resolve lingering uncertainty for state governments, employers and citizens.

McCollum agrees, saying, “Health-care reform is critical – but it should not come at the expense of our citizens’ individual rights nor by jeopardizing the role of the states in our system of federalism.”

SOURCE: Cuccinelli; McCollum

And writing in National Review, Richard Epstein also weighs in on the legal challenge. This is especially interesting to those of us who had a conference call with him about a year ago, because at the time he was skeptical that a legal challenge could prevail. But now he says, “The key successful move for Virginia was that it found a way to sidestep the well-known 1942 decision of the Supreme Court in Wickard v. Filburn, which held in effect that the power to regulate commerce among the several states extended to decisions of farmers to feed their own grain to their own cows.”

He summarizes Virginia’s sidestep this way – “It insisted that ‘all’ Wickard stands for is the proposition that if a farmer decides to grow wheat, he cannot feed it to his own cows if a law of Congress says otherwise. It does not say that the farmer must grow wheat in order that the federal government will have something to regulate. It is just that line that controls this case.”

SOURCE: Epstein


Grace-Marie Turner of the Galen Institute wrote a useful paper on the nine things states can do to resist Obamacare. I would like to add a few that the new Republican majorities in the states should do immediately to improve their own markets:

  • Reform Medical Liability. Congress never took up this issue, but tort law is a state responsibility, not a federal one. It is long past time for the states to get serious about Med Mal reform, and no matter what happens with Obamacare it will still be needed.
  • Repeal Certificate of Need. Obamacare is encouraging further consolidation of health facilities, which will result in monopoly pricing. We have one chance to go the other way and encourage greater competition between providers, and that is to immediately repeal CON and other impediments to competition.
  • Grow Consumer-Driven Health. The best and fastest way for state legislatures and governors to do this is by moving public employees into HSAs and other forms of consumer-driven health. Many school districts and municipalities have had great success in reducing their health care spending by doing this, and as soon as state and local workers get some money in the bank, they will be enthusiastic defenders of the approach.
  • Medicaid Reform. Grace-Marie suggested replicating the block grant waiver that Rhode Island secured. States also should look at Indiana for what Mitch Daniels achieved with an HSA-like program for Medicaid in that state.

States cannot sit around waiting for directions from the federal government. Obamacare may be repealed, but it will be replaced by something. States continue to be in a budget crisis and cannot afford to wait until the dust settles in DC.

SOURCE: Galen Institute